First, ID's Data Merge cannot use an Excel file as the data source. You must save as either .CSV or Tab-delimited Text (.txt).
To merge an image you need a field in the data file named with the @ sign as the first character, like @image. Then put the full path to the image, or just the filename if the images are in the same folder as the data file, in the field for each record. This is well documented in the Help files for Data Merge.
there needs to be a field in the database that has the filename of the signature that you want to use. the field header row also has to begin with an @ symbol so that indesign knows that this field represents an image, not display the field as text... but you'll find excel will display an error if you type @name - instead, type '@name (the apostrophe being the important bit) so that excel displays the @ symbol in the field. The link to the filename doesn't have to be the complete path of the image, just the filename, SO LONG AS the txt/csv file that is being used for the merge is in THE SAME FOLDER as the images used for the signature.
This link may help: http://indesignsecrets.com/automating-data-handling.php
If you want certain signatures for specific people and don't want to type them manually (say if you had hundreds or thousands of records to do this to) then an if-else formula will be required, but you'd have to search the excel forums to do this as excel is not my forte.
Worked like a charm!! Thank you so much!